DP13270 | Incentives for Information Provision: Energy Efficiency in the Spanish Rental Market

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Energy certificates (ECs) provide information about the houses’ energy efficiency, potentially al- lowing owners to earn a premium when renting more efficient houses. In this paper, we build a search model with asymmetric information regarding energy efficiency to shed light on the owners’ incentives to obtain and disclose the ECs. From both a theoretical and empirical perspective, we address three questions: (i) is there an efficiency rent premium?; (ii) do owners of inefficient houses have incentives to hide their ECs?; and (iii) how do both questions depend on the disclosure rate of ECs in the local housing market? We document a premium for more efficient houses, both with respect to less efficient houses as well as with respect to unlabeled ones. We also document a rent penalty for unlabeled houses, which is higher the greater the disclosure rate of ECs. Therefore, in local markets with higher disclosure rates, owners face stronger incentives to obtain and disclose their ECs. Through this channel, higher fines for non-compliance can give rise to a virtuous circle of disclosure that goes beyond the direct effects of increasing fines.